Warrants Commentary (13 to 17 January)
Trading activity in the Malaysian warrants market picked up last week with the overall warrants turnover growing approximately 10.0% to RM248.8mil. As usual, the Hang Seng Index (HSI) warrants remained major contributors, constituting 66.3% of total warrants turnover, followed by warrants over shares, which made up approximately 30.0% of turnover.
The HSI futures kicked off last week on an upbeat momentum, extending its 3-day rally to finish slightly below the 29,000 level at 28,962 points, up 1.0%. However, the futures closed in the negative territory for two days on Tuesday and Wednesday, losing a total 0.7%, before rebounding a total 1.1% over the last two days of the week, settling at 29,065 points last Friday.
Last week, one of the major headlines was long awaited by investors, as the US and China finally signed an initial trade deal, which is also known as the “Phase One” trade agreement, last Wednesday after months of negotiations. The pact includes Beijing’s pledge to buy at least USD200bil of American goods and services, which is more than it did in 2017, over the course of two years. In return, the US is to reduce tariffs on some Chinese imports and cancel duties that were set to take effect in December (South China Morning Post (SCMP), 16 Jan). Last Friday, China also released its 2019 economic data, which grew by 6.1%, in-line with analysts’ estimates, though this is China’s lowest growth rate in 29 years (SCMP, 17 Jan).
As the futures remained volatile, investors were seen taking both sides, trading both the HSI calls and puts. A call warrant over the HSI, HSI-C7J, recorded the highest trading volume of 249.8mil units, with investors collecting 2.3mil units of this warrant which rose 7.7% week-on-week (w-o-w). Meanwhile, the put warrant HSI-H8K came in second with investors trading 172mil units. At the end, investors sold back 8.2mil units of this warrant as it plunged 37.9% w-o-w.
Locally, FGV-C86, the call warrant over FGV Holdings (FGV) was still investors’ favorite, recording the largest trading volume of 35.6mil units over the week. FGV-C86 fell 16.7% w-o-w as its mother share price fell 3.9%. Other than that, put warrant DSONIC-HA, SKPRES-CT and MYEG-C85 were among the top traded warrants over Malaysian counters last week.
Top warrants by volume traded:
|Issuer||Exercise level/price||Expiry date|
|HSI-C7J||249.8||Macquarie||30,000||27 Feb 2020|
|HSI-H8K||172.1||Macquarie||27,000||27 Feb 2020|
|HSI-C7K||105.4||Macquarie||28,000||27 Feb 2020|
|HSI-H8T||83.5||Macquarie||27,600||30 Mar 2020|
|HSI-H8W||40.5||Macquarie||25,400||30 Mar 2020|
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Provided for Malaysian residents information only. It is not an offer or recommendation to trade and is not research material. Past performance is not indicative of future performance. You should make your own assessment and seek professional advice.